• Mexican Peso dips to six-month low, reacting sharply to the geopolitical conflict between Israel and Iran.
• Retail Sales in Mexico show improvement, offering some support and reducing losses in USD/MXN from earlier peaks.
• Banxico Deputy Governor Galia Borja comments on the ongoing challenge to reach inflation targets.

The Mexican Peso remains on the defensive after plummeting close to 5% against the US Dollar during the overnight session for North American traders. Newswires that Israel attacked Iran in retaliation for the April 13 attack triggered a massive flight to safe-haven assets, a headwind for the Mexican currency. However, economic data from Mexico lent a lifeline to the Peso, which fell to a six-month low. The USD/MXN trades at 17.23, up by close to 1%.

According to Reuters, Israel attacked Iran in response to the April 13 drone attacks. There were reports of explosions in the Iranian city of Isfahan, which houses a military base. However, Iran is now downplaying the level of damage, and it appears there might not be a military response.

In Mexico, the National Statistics Agency (INEGI) revealed that US Retail Sales improved in February compared to January. That triggered a recovery, sending the USD/MXN lower from 17.37 to 17.19. Elsewhere, Bank of Mexico (Banxico) Deputy Governor Galia Borja said, “There was much left to be done” to bring inflation down and move toward Banxico’s 3.0% target.

Across the border, the economic docket in the United States (US) featured a speech by Chicago Federal Reserve President Austan Goolsbee, who shifted more neutral following his previous dovish stance.